We need Henry Hazlitt's common sense now - BULLEN

Henry Hazlitt's economic bon mots regularly appeared in media read more by our parents and grandparents then us now.

Henry, born in 1894, didn't have a college degree. Yet his highly acclaimed, Economics In One Lesson, opened in 1946 with, "Economics is haunted by more fallacies than any other study known to man".

Among Henry's "fallacies" was "munificent" government intervention. Henry had government usually doing more harm than good, one example the guarantees of housing mortgages. He argued people were encouraged to buy what they couldn't afford. Dying in 1993, Henry didn't see the housing collapse validate his fears.

Henry liked to tell the parable of the baker's broken window, a French economic lesson by Frederic Bastiat. The French title was apt for glass, "What is Seen and What is Unseen." A young Paris hooligan threw a rock through a baker's window. After repairs were underway, the watching bystanders agreed the boy had done a good thing because the glazier needed work. But then Bastiat's "unseen", a tailor was now idle because paying the glazier left the baker unable to afford a new suit.

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Accordingly, Henry disdained "make-work" solutions for recessions. Many of Obama's Keynesian stimulus projects would have troubled him. Henry sarcastically paraphrased Keynes, "--the people who have earned money are too shortsighted, hysterical, rapacious, and idiotic to be trusted to invest it themselves. The money must be seized from them by the politicians, who will invest it with almost perfect foresight and complete disinterestedness. For people who are risking their own money will of course risk it foolishly and recklessly, whereas politicians and bureaucrats who are risking other people's money will do so only with the greatest care and after long and profound study."

For Henry Hazlitt, any government expenditure was ultimately a diversion from what would otherwise have been spent freely by private citizens. Even with government borrowing, future generations were still saddled with repaying the public debt, still deprived of their personal choices. Henry scoffed at government investment in manufacturing. As with green energy today, he said investment funded by taxes could only lead to graft and waste, i.e. crony capitalism. Henry also said recessions could only be cured with lowered prices and wage rates, which he said Keynes refuted, "with an incredible display of sophistry, irrelevance and complicated obfuscation".

Henry eventually wrote a second edition to his economics primer. After thirty years he still lamented governments world-wide had learned nothing. In particular, most countries were still using inflation as a duplicitous and surreptitious tax device. U.S. inflation, now estimated at 2 percent per year by the CBO, is an example. While progressives champion the poor and the middle class, they ironically also support Ben Bernanke's "Quantitative Easing", i.e., printing money and inflating prices. Our factories moving to China also validated Henry's concerns about inflexible union wages resulting in loss of jobs.

So what would have been Henry's remedy for China imports, for OPEC price rigging our energy sector? What would Henry have done to curtail the huge cost of health insurance? Common sense Henry would have recommended the obvious; (1) Lowering corporate tax rates to reverse the flow of manufacturing capital back to America, (2) Promoting domestic energy production to cut OPEC imports. (3) Reintroducing market restraints to the health care system with medical savings plans and other devices.

Above all Henry would have relied on U.S. entrepreneurs, not its government bureaucrats. He would have warned about agencies like the IRS becoming all too powerful. Although we will never hear from Henry Hazlitt again, hopefully there is still someone somewhere to somehow resurrect his common sense.